Weekly Analysis

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ALL INDIA RADIO (AIR) DISCUSSION : Benefits extended to workers in unorganised sector

The Topic covers GS paper 2 : Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes; mechanisms, laws, institutions and Bodies constituted for the protection and betterment of these vulnerable sections.

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The creation of Pradhan Mantri Shram Yogi Mandhan, a pension scheme for informal workers was a major announcement in the Interim Budget 2019-20.

Who comprise unorganised workers?

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Half of India’s GDP comes from the work done by 42 crore workers in the unorganised sector, such as

  • street vendors 
  • rickshaw pullers 
  • construction workers 
  • rag pickers 
  • agricultural workers 
  • beedi workers 
  • those engaged in the handloom and leather industries
  • domestic workers

What is Shram Yogi Mandhan scheme?

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  • The Shram Yogi Mandhan scheme is aimed at achieving a “comprehensive social security coverage” in their old age.
  • Therefore includes all informal sector workers with an income of less than ₹15,000 per month. 
  • According to the government, this works out to 10 crore people.
  • Under this scheme, subscribers will receive an assured monthly pension of ₹3,000 per month from the age of 60 onwards. 
  • owards this, they will have to contribute ₹55 a month (if they join at the age of 18 years), or ₹100 a month (if they join at the age of 29 years). 
  • The government will match these contributions.

How will the scheme work?

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  • Social sector workers have pointed out that creating a voluntary contributory pension scheme for informal sector workers is not likely to work as their salaries are low.
  • The argument is that they already pay large amounts as indirect taxes.
  • It must be recognised that this scheme isn’t very different from the Atal Pension Yojana which was launched in 2015.
  • Further, for a salaried worker, the pension contribution can be cut from the salary.
  • A daily wage earner or migrant labourer will, however, have to regularly deposit her income each month, which is an uncertain proposition.

What is the way forward?

  • The government needs to answer on what happens to the scheme if an informal sector worker misses a contribution. 
  • Also what happens if the worker becomes disqualified and what happens to the already paid amount.
  • Another matter to be considered is what happens to a worker who transitions to the formal workforce.